Market Commentary - July 30, 2021
Respite on Wednesday was temporarily as Nasdaq resumed declines yesterday. Dovish reassurances from the Fed Chair Jerome Powell during FOMC failed to stifle growing caution on China’s regulatory crackdown, the spread of delta variant and mixed corporate earnings. Though the S&P500 held its ground alongside Dow Jones surprisingly gaining 0.3% amid weaker than expected macro data in GDP and unemployment claims. Bad news is good news as it delays the central from tighten monetary policy. Elsewhere, benchmarks in Europe rose as investors drew comfort on sentiment data from the European Commission, illustrating record levels unseen since 1985.
In Asia, the Hang Seng suffered similar price action, down 1.5% thus far intra-day. On Wednesday night, the China Securities Regulatory Commission held a conference call with global and Chinese executives, seeking to ease risk-off sentiment after Beijing imposed tough restrictions on private education companies. Despite regulators showing they’re not tone-deaf to international concern, ultimately as decision-making arises in the upper echelons of the Communist Party, its clear further tougher policies will follow.
Australia’s S&P200 opened weaker with Sydney extending a month-long lockdown for at least another four weeks after failing to contain an outbreak in delta. Daily cases in the city alone continues to post triple digits. Likewise, with the Tokyo Olympics well underway, the Nikkei tumbles 1.7% as Japanese officials sound alarm over the city’s record-breaking coronavirus cases for 3 consecutive days.
Crude oil rose above $73.50 following an industry funded report from American Petroleum Institute revealing declining U.S. inventories implying economic reopening will weather COVID-19 flareups. The U.S. dollar loses ground among majors after FOMC, whilst gold surges $20 to $1,827. And Bitcoin fluctuates around the $40,000 level.
Figure 1 (Source: IS Prime) HK50 Daily : Rebound on the Hang Seng wanes as investors shrug off regulatory reassurances by the CSRC.
- GDP data out of the U.S. disappointed coming in at 6.5% when 8.5% was expected. Waning impact from fiscal stimulus, surging prices, and delta-variant outbreaks in South was largely the reason.
Headliner to Watch
- Plethora of flash GDP data out of the EU expected to rebound for Q1’s dismal growth as economies re-open back up
- France : 0.8%
- Spain : 2.1%
- Germany : 2%
- Italy : 1.3%
- Euro Zone : 1.5%
- Canada expected to suffer another month of contraction at -0.3%
- US core PCE price index anticipated to remain elevated at 0.6% as supply constraints continue to push prices higher whilst consumer demand remains strong.
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Topics: Market Commentary